Tuesday, May 15, 2012

Revolutionizing Trade Strategy: Science and Shopper

I recently happened on an article by DemandTec on trade strategy. Five ways to revolutionize your trade strategy. A well put set of suggestions that emphasize the analytical aspects of addressing strategy. Notable in particular was the idea that companies need to increasingly 'use science' to deliver more precise solutions. In this discussion I emphasize two areas, this aspect of science, and the goal of really understanding the shopper.

We live in an era where there is an increasing amount of behavioral data about how shoppers interact with shelf, promotion, and ultimately buy. We even have increasing amounts of data about when the shopper is in new locations, like when they are on the move with their own devices. We can even infer when the shopper is just thinking about purchases, while looking for reviews, or scanning for alternative prices. I did a study of of this kind of consumer behavior during the early days of smart phones. In the lab and then in real stores. Did this new behavior empower the shopper or embarrass them? This spectrum has been steadily evolving.

This sets the stage for both strategy and tactics for retail decisions. And another item that is mentioned: Getting shopper centric. The shopper centers themselves upon much more than just the latest promotions. They are part of a household, and keenly sensitive to their needs. They see ads on TV, on the Internet, and increasingly on their mobile devices. Flyers come to their home, often tailored to the purchases recorded on their loyalty card.

As they walk through a store, they are attracted by in store fixtures and new product announcements. Digital screens on the shelf and above them on the wall and ceilings attract their attention. Increasing numbers of choices are displayed. Announcements of new products are also interleaved between this exposure in the aisle. Inserting new brand decisions among a flurry of old thoughts. Can I use that in a recipe? Will this fit my budget? Will my household like this new thing? Three hundred and sixty degrees of decision making in an increasingly tailored retail environment. The complexity and depth of this new decision making is considerable.

As the article suggests, the 'nuances' of these interactions can be recorded in new ways to allow the tailoring these preferences locally, and leading to better strategic decisions. New data and larger databases will allow the continued tailoring of the experience. Newly derived Big Data methods will make this easier to do. It is a challenge I will be following.